Congressional Liberals: This Fiscal Cliff is Pretty Great, Actually

Posted: Nov 26, 2012 1:46 PM

No, you aren't dreaming.  This post is a virtual facsimile of the 'fiscal cliff' piece I authored two weeks ago, replete with many of the same discouraging bells and whistles -- Democrats reveling in their leverage advantage, public opinion polls spelling doom for Republicans, and no tangible progress on the actual task at hand.  If that sentence wasn't enough of a morale boost for you, feel free to read on.  Liberals in Congress, led by incoming Senate Budget Committee Chair Patty Murray, are ostentatiously demonstrating an insatiable appetite for fiscal cliff-diving.  Their attitude? Let's take the plunge and enjoy it:

Call them the cliff jumpers. A growing bloc of emboldened liberals say they’re not afraid to watch defense spending get gouged and taxes go up on every American if a budget deal doesn’t satisfy their priorities. Here’s what these progressives fear: an agreement that keeps lower tax rates for the wealthy, hits the social safety net with unpalatable cuts and leaves Pentagon spending unscathed. In other words, they’d rather walk the country off the cliff than watch President Barack Obama cave on long-held liberal priorities ... Bolstering the Democrats’ strategy is the belief that the “fiscal cliff” is actually shaped more like a “slope” where the economic effects will be felt gradually, not immediately. That theory gives Congress some time at the beginning of 2013 to set tax rates and configure budget cuts in a different political environment and with a new class of lawmakers. But underlying the tough talk is also a sense of liberal angst — the left feels like it was burned by the last extension of the Bush tax rates and didn’t get much of what it wanted in the 2011 debt-limit deal. If tax rates snap back to the higher levels from the 1990s and painful budget cuts start to hit the Pentagon, these Democrats — led by Washington Sen. Patty Murray — believe they would wield more leverage over the GOP to enact a budget compromise on their terms. And with a January deal, Republicans would technically avoid violating the no-new-taxes pledge that most of them have signed because they would then be voting to cut taxes. Republicans would most likely bear most of the public blame if policymakers deadlock. The Pew Research Center found that 53 percent of Americans would fault GOP lawmakers if Washington fails to avert the fiscal cliff; only 29 percent would point the finger at Obama.  

Let's examine each of those bolded passages, starting -- perhaps counter-intuitively -- with the middle piece.  Murray's gang believes their cliff-diving exploits would really be more like a theme park waterslide, scaring the bejesus out of Republicans without inflicting immediate, catastrophic damage onto the economy.  The White House begs to differ, warning that across-the-board hikes could devastate consumer spending in FY 2013, perhaps paving the way for another recession, but let's not spoil the fun.  The way Murray's gang sees it, even when tax rates increase on everyone (including poor and middle class families), that temporary outcome would only strengthen liberals' longer-term political hand.  "The rich" would be paying more, so mission accomplished there. Beyond that, Democrats could offer a new deal early next year that would ostensibly undo much of the damage by cutting taxes on middle income households, the result of which would merely restore current rates.  Republicans would oppose this "bargain" at their political peril.  Tens of millions of Americans would be anxiously eyeing a substantially bigger tax bill, and the GOP could ill afford to be seen as standing in the way of Democrats' tax rate cuts.  Right now, Republicans at least have the argument (echoed by President Obama in 2010) that the federal government ought not raise taxes on anyone in the midst of an economic malaise, which bolsters their case about tax hikes leading to major job losses.  

But if these Democrats get their way and we tip over the precipice, Republicans could soon be reduced to insisting that new tax cuts for "the rich" (including roughly a million small businesses) must be bundled in with any wider fix, a position Democrats would assail with shrill  -- and effective -- demagoguery.  Republicans would make sound economic arguments in advancing their case, but it would likely prove a tough message to sell to an electorate that has been at least momentarily seduced by populism and class warfare.  Which brings us to the next two points.  The first sentence of the excerpt above casts Congressional Democrats as the stubborn, intransigent actors in this mess.  They brashly declare that they're willing to cripple our military and watch every taxpaying American family suffer if the broader deal "doesn't satisfy their priorities."  If Republicans were leveling these threats, Democrats would be pounding away at their "extremism," etc.  But now it's Democrats who are adopting an unflinching posture and who seem utterly convinced that they can do so without risking political repercussions.  Why?  The Pew poll cited above (and in my previous analysis) isn't the only public opinion survey that suggests Republicans are in a lose-lose situation.  New from CNN:

Two-thirds of people questioned in a CNN/ORC International survey (PDF) say that the U.S. would face a crisis or major problems if the country went off the "fiscal cliff" at the end of the year, and if that happened, Republicans in Congress would probably receive the greater share of the blame. The poll also indicates that more than seven in ten Americans call for compromise on this issue, but they are pessimistic about that actually happening, with two-thirds predicting that Washington officials will act like "spoiled children," not "responsible adults," in the upcoming negotiations.  

In other words, people are terrified of the cliff, they expect petty dysfunction in Washington, and they're more inclined to blame the GOP for any failure that may occur.  More specifics on the damage:

Two thirds of those questioned in the poll say that any agreement should include a mix of spending cuts and tax increases, with just under one in three saying a deal should only include spending cuts. Democrats questioned in the survey overwhelmingly support an agreement that has both, and six out of ten independents feel the same way. By a 52%-44% margin, Republicans also favor a mixture of spending cuts and tax increases instead of a deal that only includes spending cuts. As for the sticking point between the parties over an increase in taxes for the wealthiest Americans, 56% say taxes on wealthy people should be kept high so the government can use their money for programs to help lower-income people, with 36% saying taxes on such high earners should be kept low because they invest their money in the private sector and that helps the economy and creates jobs.

 The poll also indicates that the GOP is not exactly bargaining from a position of strength. Fifty-three percent of the country has an unfavorable view of the Republican Party; only 42% want to see congressional Republican have more influence than the president over the direction the nation takes in the next two years. And seven in ten say the GOP has not done enough to cooperate with Obama. All of that helps explain why more Americans would blame the Republicans in Congress (45%) rather than Obama (34%) if the fiscal cliff provisions actually go into effect next year.  

According to this poll, a majority of Republican voters favor a "balanced" approach to deficit reduction, which would include increased tax revenues.  It's clear that conservatives have failed to make the self-evident case that our record deficits are the result of a spending and growth problem, not a revenue problem.  Fifty-six percent of those polled embrace an unvarnished redistributionist theme, while less than 40 percent recognize that raising taxes on "the rich" will hurt the economy. (It's worth noting that the wording of this question ignores the crucial small business/job creation angle to the GOP's messaging on this point and focuses too heavily on the investment argument).  Given the grim ideological terrain Republican lawmakers are now surveying, is it any surprise that an expanding group of them are now vacillating on -- if not outright renouncing -- their no-tax-hike pledges?  I'll leave you with a glimmer of contrarian hope from conservative Washington Post columnist Marc Thiessen, who thinks Murray et al's "bombs away" mentality could actually redound to Republicans' benefit if they just let this thing play out:

Today, the only ones in Washington who advocate fiscal cliff-diving are liberal Democrats. It’s time for conservatives to join them. Letting the Bush tax cuts expire will strengthen the GOP’s hand in tax negotiations next year, and it may be the only way Republicans can force President Obama and Senate Democrats to agree to fundamental tax reform...Letting these tax policies expire would level the playing field for Republicans in tax negotiations next year. Instead of being in a “box,” Republican leaders would have leverage again — something the Democrats want and would have to make concessions to get. Going over the fiscal cliff would help the GOP in another way: It would save Republicans from having to break their pledge not to raise taxes. If GOP leaders hold the line on taxes this fall, and the Bush tax cuts expire despite their best efforts, it would not harm their reputation as the party of low taxes. But if Republicans vote proactively to raise taxes as part of a “grand bargain,” the GOP brand would be irreparably damaged. Raising taxes and losing a fight to stop automatic tax increases are two different things.

Thiessen concludes by asserting that Americans voted for bigger government, and that Republicans shouldn't try to shield voters from the practical results of their decisions.  The problem with this somewhat spiteful argument is that more than 59 million Americans voted against this president and his agenda -- and they returned a substantial GOP majority to the House of Representatives.  The public wants meaningful compromise here, not mindless obstruction, nor unilateral surrender from either side.  Oh, and the consequences of the fiscal cliff are real; for every single taxpayer, and for our indispensable military.  I might be able to buy an argument that Republicans could eventually gain politically by calling Democrats' brinksmanship bluff -- maybe -- but at what cost to the nation?  GOP leaders appear unwilling to toss the economy overboard, even if it ultimately makes Democrats look bad...which is why the Beltway air will be thick with proposals and counter-proposals over the next four weeks.

UPDATE - For a sense of how much ground Republicans have lost on this front, read this post on polling from just five months ago.  The obvious counterpoint here is that public opinion is wildly volatile, so Republicans should think very carefully before caving out of a misplaced sense of fleeting expediency.